India Economic Reforms 2020

19–05–2020
Under PM Narendra Modi, Nirmala Sitharaman has been announcing long term Structural economic reforms.
Instead of giving direct fiscal benefits, Modi govt is anouncing structural long term reforms, this is the most commendable step of all.

Day1- MSME
first tranche of the package, announced by Finance Minister Nirmala Sitharaman, is to address the problem of liquidity being faced by MSMEs due to the lockdown.(didn’t understand much)

Day 2- Package for Migrants, vendors , farmers(more research required)

Day 3- AgriCulture Economic Reforms
In Agriculture , the problem was more on market system then on supply side.Farmers had restrictions as to who to sell who not to at what price. This law is 1955 made, when there was severe poverty. Now the situations are different.
sources: https://www.youtube.com/watch?v=aaYGqBKAUj8&t=338s
According to Ashok gulati, most of the money goes to Middle men in the markets. If even 60% of what the consumer pays goes to the farmer, it’s a big success.
Such reforms were done in Telecom(from BSNL to other telecom) , Airline(AirIndia to Private Airlines), so the these markets grew exponentially.

Day4- Coal, Defence production ,Mineral& Mining,Power companies privatised, Airline/Aerospace, Isro Private/public model, Solar

All said and done , the execution of it all is what going to matter the most. How fast and strictly is it executed, is going to make a lot of impact on Indian Economy long term.
Also , most of these reforms are already discussed by economists, experts, so much so that it seems obvious to implement it. Like GST, all developed countries have been implementing since decades . Then why don’t the govts don’t implement these sooner. Modi govt. also could have brought these reforms in 2014–15, the first year it got elected. Instead it took 6 years and a pandemic crisis to bring these changes. This is where it becomes essential to understand politics or political predictions, for the economic future of a country.

Immediate support into liquidity. Illanomics reform recommendations
Liquidity(immediate)
Tax reform.(medium)
Financial sector reform.(long term)

Two more tranches of reforms are remaining
Day-5(Todo:More Research Requied)

There are two sides of opinions on the liquidity injected into the India market.
1.Praise side opinions: By not injecting too much money into the market Govt has not increased the deficit too much.
2.Criticise opinion: By not injecting Govt is not giving enough air for small businesses to breath, or to increase demand or to bring the economy to up and running. Which is also a fair point.

But we don’t know the full impact of the pandemic yet. It may end sooner(6 months- 1year) or it may last for 2–5 years. We need to have discovered scalable cheap vaccine to know for certain when it’s going to end. Till that point this uncertainty will remain. We may think it’s over but there may be another round of virus attack. So both the above theories of injecting liquidity into the system may be said right or wrong in hindsight in future. But as of yet we don’t know which is more beneficial.